Meaning and Definition of Business
Business-Defined
Literally, business means ‘the state of being busy’ but in economic sense, the business refers to human economic activities. But every human economic activity cannot be termed as business.
According to James Stephenson, every human activity which is engaged in for the sake of earning profits may be called business.
Prof.L.H Haney defined business as a human activity directed towards producing or acquiring wealth through buying and selling goods.
In the words of Peterson and Plowman, business may be defined as an activity in which different persons exchange something of value, whether goods or services for mutual gain or profit.
Clark and Gottfried gave a correct view about business. According to them, any and all of those activities connected with the production and exchange of goods or services and the financial affairs connected with those activities.
On the basis of the above definitions, it may be said that
“Business means those human economic activities which are organized and operated freely and regularly to provide goods and services to society for the sake of private profits.
Essential Elements of Business:
If any human activity has the following elements in it, it may be referred to as business activity:
- It is connected with the production and distribution of goods and services.
- Goods must be produced for sale in return for price. Goods produced and acquired for personal consumption do not fall within the scope of business.
- Business means dealing in goods and services. The goods may be consumer goods or capital goods.
- Business involves recurrence of dealings. It is not an isolate deal.
- Business is an activity by which men make their living or earn profit. Business and profit are inseperable.Profit is a great stimulus for maintaining the continuity of business.
- A very important characteristic of business is uncertainty or risk about future in the business. It is through risk-taking that any businessman earns profit.
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